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A theory of stochastic choice under uncertainty

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  • Karni, Edi
  • Safra, Zvi

Abstract

In this paper we propose a characterization of stochastic choice under risk and under uncertainty. We presume that decision makers’ actual choices are governed by randomly selected states of mind, and study the representation of decision makers’ perceptions of the stochastic process underlying the selection of their state of mind. The connections of this work to the literatures on random choice, choice behavior when preference are incomplete; choice of menus; and grades of indecisiveness are also discussed.

Suggested Citation

  • Karni, Edi & Safra, Zvi, 2016. "A theory of stochastic choice under uncertainty," Journal of Mathematical Economics, Elsevier, vol. 63(C), pages 164-173.
    • Handle: RePEc:eee:mateco:v:63:y:2016:i:c:p:164-173
    DOI: 10.1016/j.jmateco.2016.02.001
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    References listed on IDEAS

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    Cited by:

    1. Karni, Edi & Vierø, Marie-Louise, 2023. "Comparative incompleteness: Measurement, behavioral manifestations and elicitation," Journal of Economic Behavior & Organization, Elsevier, vol. 205(C), pages 423-442.
    2. Niranjan Devkota & Alika Kumari & Sahadeb Upretee & Devid Kumar Basyal & Surendra Mahato & Deependra Karki & Udaya Raj Paudel & Seeprata Parajuli & Krishna Dhakal, 2023. "Farmers’ Perspectives on Sugarcane Management in Nepal: Empirical Evidence from Logistic Regression Model," Journal of Agriculture and Crops, Academic Research Publishing Group, vol. 9(2), pages 222-232, 04-2023.
    3. Edi Karni, 2024. "Irresolute choice behavior," International Journal of Economic Theory, The International Society for Economic Theory, vol. 20(1), pages 70-87, March.
    4. Nathaniel T. Wilcox, 2017. "Random expected utility and certainty equivalents: mimicry of probability weighting functions," Journal of the Economic Science Association, Springer;Economic Science Association, vol. 3(2), pages 161-173, December.
    5. Iain P. Embrey, 2020. "States of nature and states of mind: a generalized theory of decision-making," Theory and Decision, Springer, vol. 88(1), pages 5-35, February.
    6. Iain Embrey, 2017. "States of Nature and States of Mind: A Generalised Theory of Decision-Making, evaluated by application to Human Capital Development," Working Papers 209919485, Lancaster University Management School, Economics Department.
    7. Chew, Soo Hong & Miao, Bin & Shen, Qiang & Zhong, Songfa, 2022. "Multiple-switching behavior in choice-list elicitation of risk preference," Journal of Economic Theory, Elsevier, vol. 204(C).
    8. Edi Karni, 2020. "A mechanism for the elicitation of second-order belief and subjective information structure," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 69(1), pages 217-232, February.
    9. Patrick Schmidt, 2019. "Eliciting ambiguity with mixing bets," Papers 1902.07447, arXiv.org, revised Jul 2022.
    10. Edi Karni & David Schmeidler, 2016. "An expected utility theory for state-dependent preferences," Theory and Decision, Springer, vol. 81(4), pages 467-478, November.
    11. Karni, Edi & Zhou, Nan, 2021. "Weighted utility theory with incomplete preferences," Mathematical Social Sciences, Elsevier, vol. 113(C), pages 116-135.
    12. Piermont, Evan, 2017. "Context dependent beliefs," Journal of Mathematical Economics, Elsevier, vol. 71(C), pages 63-73.

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